WBCSD FLP2014-Accenture-IPM (1)

Integrated Performance
Management
Better decisions today,
better impact tomorrow

Integrated Performance Management
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The UN Global Compact-Accenture CEO Study on
Sustainability 2013 showed that the corporate sustainability
movement is broadening, with a deeper awareness and
commitment evident globally. In a sample of over 1000
CEOs, 76% believe that embedding sustainability into core
business will drive revenue growth and new opportunities1,
and 78% of investors see sustainability as a differentiator in
determining industry leaders2.
Yet, we see a gap between this common awareness and
current practice. Many business leaders express doubts about
the pace of change and the scale of their impact. They cite
difficulties in embedding the right knowledge and skills,
and challenges in identifying material issues, which are
preventing investors and companies alike from taking full
account of sustainability issues in company assessment and
valuation.
In Reporting Matters 2013 – A baseline report3, the World
Business Council for Sustainable Development (WBCSD)
found that whilst the majority of its members report on
their sustainability performance, and invest significant
resources in producing relevant data, the connection
between sustainability performance and value creation was
not explicit. To improve the flow of information for better
decision making, the WBCSD has initiated the ‘Redefining
Value’ program, and channelled the efforts of the 2014
Future Leaders Program towards “Bridging the Capitals
– Accounting for Natural and Social Capital in Business
Decision Making”.
Building on these efforts, the WBCSD Future Leaders Program
and Accenture have partnered to provide a new perspective
on the way companies integrate sustainability in their
performance management. Together we introduce a new
concept: “Integrated Performance Management”. Through an
in-depth analysis of current practice at major corporates, we
explore different methods for capturing environmental and
social capitals in a business context, the challenges faced,
and the actions companies are taking to improve integration.
Moving to a wider concept of performance in this way
enables companies to sharpen strategic decision making and
deliver long-term sustainable value.
1. United Nations Global Compact and Accenture (2013): The UN Global Compact-Accenture CEO Study on Sustainability 2013. New York, September 2013.
2. United Nations Global Compact and Accenture (2014): The Investor Study: Insights from PRI Signatories. New York, June 2014.
3. WBCSD (2013): Reporting Matters. Improving the effectiveness of reporting. Geneva, Switzerland. November 2013.
Dr Rodney Irwin
Managing Director - Redefining Value and Education, WBCSD
Bruno Berthon
Global Managing Director,
Accenture Cross-Industry Strategy & Sustainability
Foreword

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The WBCSD Future Leaders Program
(FLP) was established to identify the
skills needed by future leaders of
member companies, and to provide a
unique platform for them to develop
and test these skills in a real-world
setting.
The FLP is a unique professional and
leadership development opportunity
aiming to provide future business
leaders with an in-depth understanding
of sustainability challenges that will
feed into their strategic decision-
making. It is designed to help future
leaders in their dealings with the
often complex interdisciplinary
topics, issues and concepts that will
influence their future, as well as
the future of their organizations. In
addition to opportunities for face-
to-face interaction, the program
creates a global network of dynamic
business leaders, capable of acting as
sustainable development ambassadors
both within their companies and in
society.
This report reflects the findings of
the 2014 FLP participants through
individual reports, a group project, and
extensive discussions with company
representatives, experts, and peers on
this year’s topic: “Bridging the Capitals
– Accounting for Natural & Social
Capital in Business Decision Making”.
The WBCSD Future Leaders Program (FLP)

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As sustainability rises on the political
agenda, the business community
has been reformulating its role in
contributing to addressing global
sustainability challenges. Companies
clearly recognize the mutual influence
between their business and the natural
and social environment in which they
operate, with 93% of CEOs saying
that sustainability is key to their
organization’s success.4
Despite this shared motivation, only
38% of CEOs report that they are able
to accurately quantify the business
value of their company’s sustainability
initiatives. This clearly indicates that
the definition of company performance
must evolve beyond traditional
financial metrics to take into account
social and environmental aspects.
(IPM), a term introduced here for
the first time, allows us to envision
company performance management
which addresses all three aspects of
sustainability – financial, social, and
environmental. Building on the four
standard performance management
cycles: plan-do-check-act, Accenture
has developed a framework to
investigate how far companies have
come in integrating sustainability
into their strategy, key performance
indicators, and performance
monitoring, and how they are using the
results to adjust their business strategy
and to inform decision making.
Companies are moving from
strategy to execution
Based on application of the Accenture
analysis by 16 WBCSD companies
participating in the 2014 Future Leaders
Program, it is clear that the majority
of organizations have a robust process
in place for creating a sustainability
strategy, involving a range of internal
and external stakeholders to help them
identify material issues. However,
they face three common challenges
in implementing the IPM required to
deploy these strategies.
The first challenge concerns metrics
and measurement, especially how
to select the right indicators, ensure
consistent data quality, and create an
efficient process for data collection.
Data automation and careful selection
of metrics with the input of experts
can go a long way to addressing this
problem. Second, how to engage
employees is not always obvious.
WBCSD members have found the deep
involvement of corporate leadership
to be essential. Engaging in a two-
way dialogue with employees that
leaves room for local initiative and
offers incentives has been highlighted
as an effective approach. Third,
companies are still exploring how to
link results from IPM to business value.
Monetization is one potential solution
being piloted by organizations, with
the potential to express social and
environmental risks and opportunities
in the currency used by business,
and therefore better integrate these
into financially driven systems and
processes.
Executive Summary
The greatest opportunity lies in
driving future performance
Most organizations analyzed currently
measure the sustainability impact
of current operations, and target
incremental improvement on existing
impact. However, discussions with
participants clearly show that the
greatest opportunity lies in using IPM
to ground strategic decision making in
the realities of business performance.
By incorporating environmental and
social value into risk management,
investment selection and product
development, companies will have
the information they need to make
the transition to a more sustainable
business.
4. United Nations Global Compact and Accenture (2013): The
UN Global Compact-Accenture CEO Study on Sustainability
2013. New York, September 2013.

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A broader definition of business
performance
Business is facing increasing
expectations from investors, consumers,
stakeholders and communities to
bear responsibility for its impacts on
society and the environment. Business
leaders are getting the message: in
the UN Global Compact-Accenture
CEO study on Sustainability, surveying
over 1,000 business executives, 93%
of CEOs regard sustainability as key to
success. In addition, 76% believe that
embedding sustainability into core
business will drive revenue growth
and new opportunities, and 63% even
expect sustainability to transform their
industries within five years5.
In recognizing the significant mutual
influence between their business and
the natural and social environments
in which they operate, companies are
coming to the realization that their
definition of performance must move
beyond traditional financial metrics.
This report introduces the concept of
(IPM), to describe organizational
performance management which
addresses all three aspects of
sustainability equally – financial, social,
and environmental. This encompasses
how environmental and social
considerations can be integrated into
the process of developing a strategy,
implementing it through a set of
Key Performance Indicators (KPIs),
monitoring performance, and using the
results to fine tune plans, and to inform
wider decision making.
As with traditional performance
management, the IPM process follows
four steps in a plan-do-check-act
management cycle6 (Figure 1).
Introducing Integrated Performance
Management
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• Define material issues
• Define organizational
strategy
• Set objectives and
targets
• Define KPIs
• Align with existing
processes
• Engage employees
• Measure performance
• Integrate in existing
systems
• Automate data
collection
• Use in challenging
strategy
• Use for optimizing
operations
• Use for strategic
decisions
Figure 1 The plan-do-check-act management cycle
1. Plan
Determining the strategic focus
An organization identifies its environmental and social material
issues, elaborates its strategy to address these, sets targets, and
communicates them internally and to external stakeholders.
3. Check
Monitoring progress
An organization collects KPI data and other information on
performance, and compiles it in a format that allows for regular
assessment of progress against targets across the organization.
2. Do
Implementing the KPI framework
An organization develops corporate strategy into a framework
to be applied in daily operations, which includes selecting
performance indicators, specifying processes and defining roles
and responsibilities.
4. Act
Turning results into opportunities
An organization uses the results from the performance evaluation
to identify opportunities for improving existing activities,
informing future decisions, including addressing risks, investing,
and developing new products.

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Why companies are moving
to integrated performance
management
Every business will have a different
reason for adopting IPM, depending
on the nature of its operations and the
conditions under which it operates, but
there are five broad themes that are
driving the move towards IPM.
Regulation and reporting: Several
countries now require a company to
disclose non-financial information.
Most recently, South Africa moved to
Integrated Reporting on a “comply
or explain” basis. In April 2014, the
European Parliament amended the
legislation on the annual account of
limited liability companies7, requiring
major businesses report on social,
environmental and human rights
impacts. Similarly, in France, Article
225 of the Grenelle II Act requires all
listed companies in the country to
publish information on the social and
environmental impact of their activities,
and detail their commitment to
sustainable development. Furthermore,
several international initiatives describe
how to integrate environmental and
social factors into global and long-term
analysis of corporate financial results:
among which the Global Reporting
Initiative (GRI), the International
Integrated Reporting Council (IIRC), the
Sustainability Accounting Standards
Board (SASB) and the OECD Principles
of Corporate Governance (2004).
Risk management: All companies
manage risks, whether financial or
operational, to ensure their long term
success. IPM can help a company to
quantify and manage its environmental
and social risks, preventing financial
losses.
Investor demand: More and more,
investors are asking for sustainability
information on companies. IPM attracts
investors and strengthens investor
relations. Indices such as the Dow
Jones Sustainability Index (DJSI), the
FTSE4Good, the Carbon Disclosure
Project (CDP) and Ethibel provide large
companies with a platform from which
to communicate their sustainability
credentials and to burnish their
corporate image. Many investors now
expect companies to join these indices,
and as membership in these indices
rises, so too, does the importance of
effective performance monitoring.
Employee attraction and retention:
Sustainability performance is
increasingly used as a recruitment
tool in the war for talent. Strong IPM
can create a comparative advantage,
helping to attract top talent who share
the companies vision on sustainability.
“Publishing our social and environmental indicators
helps us make sure our intentions are turned into
reality. We also include several indicators in our Group
management dashboard so we keep a global focus on
this critical responsibility.”
Marc Henry,
Chief Financial Officer and member of the Executive
Council, Michelin
New definitions for integrated performance management
Business Value
Companies are accustomed to measuring the performance and the value of
their business activities. But how does a company capture value?
A traditional accounting view of value is a measurement of the extent to which
an entity generates financial wealth. In this context value is often narrowly
defined as shareholder returns, through dividends and capital gains. This leads
companies to define success through the maximizing of shareholder wealth.
Increasingly companies are recognizing the importance of their actions in
the context of both financial and non-financial stakeholders. The values of
employees, customers, suppliers, and society at large, among others, can also be
created and destroyed by company operations.
In this context the more holistic definitions of value can aligned to the ‘triple
bottom line’, incorporating social and environmental factors in the definition of
business value8.
The International Integrated Reporting Framework identifies the concept of
business value beyond financial returns. The IIRC states that value has two
interrelated aspects – created for (1) the organization itself, which enables
financial returns to the providers of financial capital, and (2) for others
(stakeholders and society at large)9. Often financial reporting does not capture
these other values, because a company may not always see a direct correlation
between these values and financial results and shareholder returns. However
non-financial values are crucial to the long-term success of a business.
Materiality
IPM requires a new definition of materiality, because it covers a different set
of issues than conventional financial performance management. But what
exactly should be measured, since there are many gauges of non-financial
performance? What are the material issues? How do we determine materiality?
While the definition of materiality has many versions in sustainability reporting,
the classical definition comes from financial reporting. Under the Conceptual
Framework for Financial Reporting of International Financial Reporting
Standards, “information is material if omitting it or misstating it could influence
decisions that users make on the basis of financial information about a specific
reporting entity”10. Materiality in this sense is often expressed in monetary
terms.
The International Integrated Reporting Framework takes another approach to
materiality that encompasses non-financial criteria like environmental, social
and governance issues11:
1. Identifying relevant matters based on their ability to influence management
in making business decisions
2. Evaluating the importance of relevant matters by their known or potential
influence on decision making
3. Prioritizing matters on relative importance
A recent report by WBCSD FLP delegates takes this approach further and
defines material issues as those that “threaten a company’s ability to operate its
business model and execute its strategy”12.
Methodology
This report is based on joint analysis
by the WBCSD Future Leader Program
(FLP) 2014 and Accenture, in which
participants of the WBCSD Future
Leaders Program applied Accenture’s
performance management maturity
model. Each participant interviewed
key stakeholders company-wide
about management performance
on environmental and social values,
and used their findings to fill out a
questionnaire based on the evaluation
framework. Participants discussed
their results with experts at Accenture
and the WBCSD, wrote individual
reports on their findings, and discussed
the challenges and opportunities of
applying IPM.
The process yielded a rich body of
information about the frameworks,
systems and processes used in IPM.
The report covers 16 multinational
companies in a range of sectors,
including banking, chemicals,
consulting, consumer products,
engineering, material processing, retail,
energy and technology.
5. United Nations Global Compact and Accenture (2013): The
UN Global Compact-Accenture CEO Study on Sustainability
2013. New York, September 2013.
6. This cycle was originally described by Demming, and is also
called the Demming Cycle (Hervani, A. a., Helms, M. M.,
Sarkis, J. (2005): Performance measurement for green supply
chain management. Benchmarking: An International Journal,
12(4), 330–353). It is also used in the ISO 14031 guidelines for
environmental performance evaluation
7. Council Directives 78/660/EEC and 83/349/EEC.
8. WBCSD Future Leader Program (2014): Unravelling the
Business Value Landscape
9. International Integrated Reporting Council. December 2013.
International Integrated Reporting Framework, p. 10.
10. International Accounting Standards Board. September 2010.
The Conceptual Framework for Financial Reporting.
11. Modified from International Integrated Reporting
Framework, p. 18. International Integrated Reporting Council.
December 2013.
12. WBCSD Future Leader Program (2014): The journey to
Materiality

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Accenture’s maturity model
Based on the plan-do-check-act
management cycle, Accenture has
developed an evaluation framework
that provides a holistic approach
designed to systematically assess an
organization’s integrated performance
management capabilities and identify
opportunities for improvement.
Respondents assessed themselves
against the criteria within this model,
on a rating from 1 to 5, where 1 is
‘basic’, 3 is ‘competitive’, and 5 is
‘leading’. Recurring themes include
the level of integration across the
organization, consistency between
phases, and involvement of different
parts of the business. Within each
step, the tool distinguishes high-level
concepts which are assessed through
secondary parameters.
Plan
Sustainability is a complex concept, so
the first phase of the model focuses on
the process of defining this concept in
the business context and stakeholder
environment. The underlying
parameters are (1) determining material
issues, (2) aligning strategies and
goals, and (3) establishing a robust KPI
selection process.
Do
The implementation of IPM in daily
practice consists of defining the
activities for collecting data, turning
this into useful information, and
distributing it through the organization.
The model covers this step through
three parameters: (1) data collection
process, (2) approach for analyzing and
converting data, and (3) reporting and
communicating information.
Check
For the check-phase, the maturity
model zooms in on the organization
of the data collection process itself.
The secondary parameters are (1)
defining roles and responsibilities, (2)
automation, and (3) integration in the
existing business controlling process.
Act
The results from IPM can be used in
two ways, firstly, to evaluate the IPM
process itself, and secondly, to inform
decision-making. The tool assesses
both areas, with parameters covering
(1) refining metrics and processes, (2)
evaluating progress against targets
and peers, (3) challenging strategic
assumptions, and (4) using results in
decision making.
Evaluationparameters
Determining material
issues
Aligning strategies
and goals
Establishing a robust KPI
selection process
Data collection
process
Approach for analyzing
and converting data
Reporting and
communicating
information
Defining roles and
responsibilities
Automation
Integration in the
existing business
controlling process
Refining metrics
and processes
Evaluating progress
against targets and peers
Challenging strategic
assumptions
Using results in
decision making
Plan
Figure 2: IPM maturity model, and evaluation parameters
CheckDo Act
The state of integrated
performance management among
major corporates
The study shows maturity varies across
the steps of the plan-do-check-act
cycle. In many cases, executives are
driving the initiative to measure
environmental and social performance
alongside financial performance,
because they want to gain insight
into the progress being made towards
corporate sustainability goals. As a
result, the strategic focus is clear
from the outset, but the challenge
lies in translating strategy into a
meaningful and practical framework
for the organization. The process of
determining the strategic focus is
therefore the most mature step in the
plan-do-check-act cycle (Figure 3).
With sustainability strategies in place,
companies are now shifting their focus
to their environmental and social
impacts within their operations. They
are exploring methods for measuring
environmental and social impacts,
possibilities for making the link with
business value, and ways for integrating
the insights into existing processes,
systems, and most of all, into decision
making.
Despite growing attention, monitoring
progress was the least mature
category. This resonates with the
2013 Accenture-UNDP CEO Study on
Sustainability, where only 38% of CEOs
report that they are able to accurately
quantify the business value of their
company’s sustainability initiatives.
Clearly, putting a sustainability strategy
in place does not guarantee effective
implementation, and companies are
grappling with the challenges of
embedding IPM throughout their
operations. In the following sections,
we address each step of the plan-do-
check-act management cycle.
Figure 3: IPM is relatively mature in strategy, less so in operations
1
2
3
4
5
Maturity score
Avg 3.36
Translating results
into opportunities
3.48
Monitoring progress
3.04
Implementing the
IPM framework
3.36
Determining
strategic focus
3.55

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Integrating environmental and
social aspects into corporate
strategy
Companies typically conduct
sustainability materiality assessments
as part of their strategic planning, so
the process is relatively mature and
well-established. Many respondents
indicate that they determine material
issues using a structured analysis that
involves a wide range of stakeholders
(Figure 4). This process is fairly well
integrated into overall corporate
strategy.
Figure 4: Respondents involve a range of stakeholders in materiality assessment and are beginning to integrate environmental and social targets into overall
corporate strategy
Using a structured analysis that involves all
relevant internal and external stakeholders IPM goals and objectives are fully integrated
within the overall corporate strategy and
developed in conjunction
Using a structured analysis that involves a
range of internal stakeholders spanning the
whole organisation
There is a single process of determining
IPM strategy and business, but there is
little interaction between the two during
implementation
Through observing the behaviour and actions of
their peers
The IPM strategy process is separate from the
business strategy process
Input from independent experts: Mitsubishi Corporation
Mitsubishi Corporation has a CSR Environmental Affairs Advisory Committee,
consisting of external experts on sustainability. This Advisory Committee reviews
performance twice-yearly to discuss the company’s sustainability initiatives.
Additionally, each year they visit a specific business project to assess how
sustainability is embedded at the operational level. The company’s Executive
Vice President in charge of CSR Environmental Affairs chairs the Advisory
Committee, and recommendations from the Committee are conveyed to the
Executive Committee. Their expert opinions are highly valuable in developing
new approaches for addressing sustainability issues, for instance through new
initiatives and refinement of KPIs. Their input is also integrated into annual
reporting at Mitsubishi Corporation to communicate this to the wider stakeholder
community.
Plan
Understanding the bigger picture
Do
Creating a common approach with room for
individual initiative
Involving the whole organisation
For a company to perform well, all
business areas must work effectively
in a structured way. This is no different
when environmental and social aspects
are included. How involved a business
area is in IPM varies widely (Figure 5).
Amongst respondents, procurement and
production are the most involved, while
financial departments are the least.
Engagement is broadest when costs
reduction is the main driver. Developing
new sustainability-related products
and services is usually a narrowly-
defined responsibility, and the finance
department is least involved in this
undertaking.
Balancing shared vision with local
differentiation
When putting an integrated strategy
into action, global corporations need
to account for differences between
geographies and business units. Most
respondents have adopted an approach
of differentiation bound by a common
agenda. Within an overarching strategic
framework, business units are charged
with defining how they will contribute
to corporate targets.
Figure 5: Levels of engagement and drivers of value vary by department
Procurement
Production Sales
Human Resource
Finance
Marketing
Developing new products and services
Cost Reduction
0
1
2
3
4
5

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Sustainability KPIs from the bottom up: Sonae
At Sonae’s food retail business unit, every department at every level has to
contribute to doing sustainable business on a daily basis, having dedicated
sustainability KPIs.
These KPIs and targets are not imposed top-down. The company’s leadership
creates an environment in which the awareness that the potential negative
business impact must be reduced and that there must be a constant effort towards
sustainability becomes part of corporate culture, and each department is involved
in defining its own contribution.
When considering Sonae’s ambition to increase water efficiency, for example, the
technical experts in the departments assess the level of efficiency they can achieve,
based on their knowledge of the processes in their area of work. Subsequently,
the Head of Environment discusses the plan with the Chief Operating Officer in
order to agree on the right ambition level. This process ensures that the whole
organization contributes to a number of overarching goals, while allowing for local
approaches and bottom-up initiative. Altogether, this creates a strong sense of
ownership in the organization, delivering better results.
Many respondent organizations
support bottom-up initiatives by
providing guidance for processes and
roles, but few have fully defined and
documented these (Figure 6). Defining
and documenting jobs at operational
level is less mature than for other steps,
even though a clear understanding of
the task on the ground is essential for
seeing through any strategy.
The respondent companies take
different approaches to building
expertise. Some companies give
guidance to different departments
through a centre of excellence on IPM,
so employees have a single place they
can turn to. Others spread awareness
and expertise throughout the
organization by naming a sustainability
champion for each department.
13. RACI diagrams define roles and responsibilities in a
process that, distinguishes between ‘Responsible’ (R),
‘Accountable’ (A), ‘Consulted’ (C) and ‘Informed’ (I).
Focusing on businesses and manufacturing: Dow Chemical
Effective integration of sustainability in business processes often requires a
conscious move on the part of leadership. The Dow Chemical Company aims to
move away from a centralized and siloed sustainability function: its goal is to have
sustainability ingrained in the businesses and manufacturing sites.
Dow has dedicated resources working to integrate sustainability metrics into
the businesses and at its sites, and there is a formalized process for translating
sustainability goals into actions at all levels. As a goal is determined in the
strategy-setting process, an executive sponsor, reporting directly to the CEO, and
an implementation leader are identified. While both are responsible for the goal,
the implementation leader is ultimately accountable for the goal’s attainment.
This leader has typically been involved in the development of the goal, and
thus will understand the strategy and means of achieving the goal. Beyond the
implementation leader, full RACI diagrams15 are completed for each sustainability
goal, defining participants across levels of the organization.
The team assigned to design each goal must go through a rigorous process to
determine how the goal will be met and define its feasibility, cost, timeline, and
benefits. A document, referred to as a “white book,” is created that lays out the
framework for reaching each goal and the positions accountable for and involved
in the goal implementation.
As employees work toward achieving specific goals, they regularly share stories and
best practices driving the business in a more sustainable direction.
Figure 6: Maturity of standardization and formalization of roles and processes
Defining
KPIs
Job
descriptions
Establishing
objectives
3.3
Monitoring
KPIs
Implementing
KPIs in
organisation
Standardised and
formalised
Differentiated and
informal

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Engaging employees through
strong leadership
Bringing employees on board with
sustainability is an essential element of
effective IPM. While most respondents
have robust ways of communicating
environmental and social value and
performance to employees, that effort
does not automatically translate into
greater employee understanding
(Figure 7).
The research shows that strong
leadership is the best way to engage
employees. Board-level commitment
and dedicated people can significantly
boost the awareness of sustainability
ambitions. The most mature steps
towards integrated performance are
those in which people at strategic level
are involved (Figure 8).
Figure 7: Employee engagement on environmental and social performance
Figure 8: Employee engagement strongest when executives are involved at strategic level
Communication
within the
organisation
3.2
Understanding
among employees
Robust and specific
Limited and
general
Maturity Level
Responsibility
of the Strategic
level
14
12
10
8
6
4
2
0
Maturity score
Number of respondents
Translating
results into
opportunities
3.48
Monitoring
progress
3.04
Implementing
the IPM
framework
3.36
Determining
strategic focus
3.55
Creating a common culture of responsibility: the Solvay Way
In 2013, Solvay group launched the “Solvay Way”, a sustainable development policy
that provides a framework to guide and measure company’s success at meeting its
objective.
Through the Solvay Way, the company has been able to increase the awareness on
non-financial capitals within the teams, from corporate-level to plant-level. The
Solvay Way provides a framework of commitments that enables all Group entities
to self-assess their sustainable development progress on the basis of 49 practices.
This allows Group entities to develop action plans, which are reviewed every
year for all locations, scored and audited. Each business unit has a Solvay Way
champion, who helps the local teams in the process of applying the framework.
Progress on the Solvay Way is one of the KPIs in the evaluation of the performance
of management. This way, 10% of bonuses of the company’s 7,500 managers are
linked to sustainable development indicators.
Incentivizing sustainability in
individuals and teams
Incentives can motivate employees to
act on sustainability-related business
impacts, but only if employees
can directly influence the related
performance indicators in their work.
Various companies assign
accountability to individuals for
sustainability performance, often at
board level, making sustainability
targets part of employee compensation.
Because reaping environmental and
social benefits often takes joint effort,
many organizations create incentives
for the whole team. Especially at field-
level, setting pay-related sustainability
targets for individuals is less common.
Reward for Green: KBC
Within its Belgium Business Unit, KBC
has introduced a ‘Reward for Green’
initiative that rewards employees
driving sustainability-related
improvements. The company aims to
reduce annual paper use and electricity
consumption by 5%. Three years into
the programme and the ‘easy wins’
have been achieved, which means that
meeting the target is becoming more
challenging every year. To stimulate
creative ideas, employees may receive
rewards for suggesting ways to
continue reducing the impact on the
environment.

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Measuring to manage
Being able to measure and monitor
sustainability performance is vital, and
it can be very difficult if a business
cannot easily obtain up-to-date
information on environmental and
social metrics.
Companies typically have a process
to continually monitor financial
performance, but they usually only
assess environmental and social
performance once or a few times a year
(Figure 9). While they make decisions
taking environmental and social factors
into consideration more frequently,
these decisions cannot be grounded in
up-to-date insights if performance data
is not readily available.
Introducing more effective and
standardized data collection is a key
step towards IPM, but the lack of data
quality and unwieldy data collection
are often barriers. Poor data quality
often results when standard metrics
and data format are absent, meaning
information on the environmental
and social aspects of business
performance is not homogenous across
an organization. Data collection also
acts as a barrier when done manually,
or when sustainability-related KPIs are
gathered in a separate system, which
must then be aligned with financial
management processes.
Standardizing data
Improving data quality starts with
sound metrics. KPIs need to be
quantified in a meaningful way, and
data selected that can be monitored
practically. Data also need to be
normalized so companies can draw
comparisons between parts of the
business, and choose the right
frequency for measuring. To ensure
KPIs are robust, many companies call
upon independent experts to audit
environmental and social performance.
Figure 9 Environmental and social performance evaluated a few times a year at most
Check
Developing the ability to measure performance
Evaluating
performance
Strategic decision
making
Assessing strategy
targets
3.3
Ongoing
Annual or less
Automating data collection
Automation facilitates regular data
collection, and putting the right system
in place to streamline and automate
the process is an important step for
monitoring progress efficiently. Many
respondents have a measurement
system, but few have fully integrated
environmental and social metrics
into their automated business control
systems. Dashboards for monitoring
performance are relatively common,
and respondents highlight that they
give a clear overview of progress
to operators and management. The
survey shows companies with regular
automated data collection use
environmental and social metrics more
often in decision making (Figure 10).
Integrating sustainability parameters into financial systems: Eskom
Eskom has developed integrated existing non-financial modules into its
financial system for managing business performance. Getting this in place
required dedication and time to tailor some of the features of the system to the
organization, and to incorporate the additional data and data parameters and
requirements. Even at an early stage of implementation of the non-financial
aspects of the system, benefits were being experienced given that data is readily
accessible centrally and a common data set exists for the whole organization – this
is essential for the sustainability assurance process.
CSR screening of investment funds: KBC Asset Management
At KBC Asset Management, a member of the KBC group, Socially Responsible
Investment (SRI) funds have been introduced that encompass specific sustainable
themes or target sustainability leaders within each industry group. Within these
funds, CSR-related KPIs play a determining factor in screening the eligibility of the
issuer of equity, as well as in screening countries and companies for SRI funds.
The screening of SRI funds is overseen by an external board of experts in the field
of human rights, the environment and business ethics. This board determines the
reliability, completeness and transparency of the screening results and advises
about the extent to which SRI complies with KBC’s policy on CSR.
Figure 10: Information used more frequently when data collection is automated
Basic Level of automation Advanced
Use in decision-making
Ongoing
Incidental

23
22
From a better today to a better
tomorrow
While IPM helps companies monitor
and improve current activities,
the benefits of using IPM for the
future should not be overlooked. By
integrating IPM into decisions on
new investments and new product
strategies, a company can identify and
mitigate risks, and seize new market
opportunities. In this way, IPM informs
the transition to a more sustainable
business.
In practice, companies focus primarily
on the present, and more commonly
use environmental and social indicators
for operational decision making than
for strategy. The research shows
integrating environmental, social and
financial performance is most common
when costs reduction is the main driver
(Figure 11).
Figure 11 Environmental and social performance data used most for cost reduction
Incidentally used
for decision making
Cost reduction
Develop new products
services
Regulatory compliance
Risk mitigation
Increased brand value
Used in decision
making on an
ongoing basis
Act
Linking decision making to business value
3.33
3.62
3.91
4.14
4.20
GROWTHLICENSETOOPERATE
Screening investments by sustainability impact: Mitsubishi
Corporation
At Mitsubishi Corporation, all major investment proposals are screened by the CSR
Environmental Affairs Department on social and environmental issues before
getting approval by the Board. This approach is not without its challenges. For
example, it is difficult to establish a harmonized set of metrics for measuring social
and environmental impacts across the company’s diverse business portfolio, as the
relevant aspects will differ, and conditions will vary by geography. Overall, however,
the company has made good progress in embedding social and environmental
issues into financial decision-making. The screening framework helps the company
to mitigate its investment risks, whilst also creating a strong engagement platform
to raise awareness of sustainability issues throughout the organization
Moving towards sustainable products through a clear vision and
concrete targets: CLP Group
Back in the early 1990s, CLP was a Hong Kong based power business with coal as
its main source of fuel. Today CLP has developed into a regional energy business
with a considerable portfolio of renewables. Since launching its first renewable
energy target (of 5% by 2010) in 2004, CLP continues to keep track of its
renewable energy and carbon intensity targets as manifested in its “Climate Vision
2050” published in 2007. These targets have driven CLP to invest in renewable
energy – from a small hydro project investment in China in 1997 of less than
100MW to a renewable portfolio of over 2.5GW at the end of 2013, which now
includes wind, solar and hydro projects spanning across China, India, Thailand and
Australia.
Win-win by reducing Packaging: Unilever
In 2013, Unilever launched new packaging of three of its top-selling deodorants
in the UK. The new spraying cans only use half the propellant, approximately 25%
less aluminum and one third less road transport because of their compressed size.
Not only has this decreased Unilever’s carbon footprint, but it has also positively
impacted sales and customer satisfaction of the three deodorants. This approach is
now being implemented in other brands within the Unilever holding.
A direct link between sustainability
impacts and financial value can be
made in operational decisions most
easily. In manufacturing, for example,
environmental metrics such as energy
use or water consumption are closely
interwoven with the production
process, directly tying sustainability
with financial performance. Employees
managing these processes are involved
daily in integrating performance
management, although they may not
explicitly recognize it is part of their
job.
On long-term strategy, companies
use the results from IPM most for
product development. Evaluating the
sustainability performance of existing
products and services helps a company
identify opportunities for creating new
markets and better, cheaper and more
sustainable products.

25
24
Challenges for Integrated
Performance Management
Many companies have robust
sustainability strategies and understand
the mutual effect between their
business operations and the natural and
social environment. They understand
that IPM is crucial to deliver on their
sustainability ambitions. But getting
there is not always easy. Through
the course of this research, the FLP
delegates have encountered a set
of challenges that will need to be
overcome to scale up the practice of
IPM. In parallel, they have established
the clear opportunities that are
motivating their organisations to
continue on this journey.
Companies need to shift from
producing KPIs to taking the actions
that flow from the analysis of KPIs.
The main challenge in this, FLP
delegates agree, is how to make IPM
more efficient and coherent, and how
to translate data into information
for decision making. FLP delegates
also highlight three other challenges:
data, organizational culture, and
monetization.
Data quality and consistency
To support sustainability goals requires
a wide gamut of non-financial KPIs
on environmental and social metrics,
which poses challenges for the quality,
consistency, and collection of data to
measure and monitor these metrics.
Some FLP participants see a lack of
alignment of data as a major problem
for data quality and consistency:
measures used at corporate level
are often disconnected from KPIs
used at operational level. What is
more, companies typically evaluate
performance as change versus
a previous internal benchmark.
Benchmarking against external
companies would contribute to faster
uptake of best practice and ultimately
speed progress, but is impeded by a lack
of ability to compare KPIs and limited
data in the public domain.
Data collection of KPIs is often
manual and time consuming, so many
companies collect data only once a
year. As a result these KPIs do not
figure into the periodic reporting and
performance management cycles for
review of financial and operational
metrics. Even though more companies
are investing in custom software to
help automate the process, these
metrics are often separate from the
existing systems for business control.
A sustainability culture
Organizational awareness of
sustainability strategy is another
important challenge. A safety culture
is well established in many FLP
companies, but while social and
environmental aims at these firms
are often articulated at the corporate
level, they are not well understood by
employees in local units. Employees
therefore find it hard to translate
high-level objectives into actions they
can take in their daily work. What is
more, few companies provide financial
incentives for achieving environmental
or social objectives.
Monetizing impact
Companies invest in IPM to mitigate
risk and unlock future business
value, yet few companies monetize
the value derived from these efforts.
This is primarily because established
frameworks for monetization are
missing, and assigning value to
environmental and social impacts is
an inherently uncertain undertaking.
But without this framework, it is hard
to evaluate competing projects and
translate sustainability investments
into business value.
Lessons learned from FLP delegates

27
26
Throughout the research, FLP
companies have agreed that the move
towards IPM gives organizations
a better handle on their everyday
business in three major ways.
Better measurement and
management
Integrating environmental and social
metrics provides greater insight for
managing performance, a better
handle on internal controls, and
sharper management focus. IPM offers
companies a way to automate and
streamline measurement systems for
environmental and social performance,
and integrate them into their financial
systems. Set-up costs for an integrated
system may be high, but the cost
savings and benefits usually out-weigh
the initial outlay. Metrics should be
selected carefully, so only the most
relevant KPIs are monitored, which
leads to lower data collection costs and
more relevant reporting.
Better engagement in new dialogues
Companies with well-anchored
sustainability goals and a mature
IPM framework are able to engage
more effectively with their external
stakeholders. They can work with
investors, and access new funding by
issuing green bonds. They strengthen
relationships with suppliers through
sustainable procurement. By seeking
partnerships with customers and
consumer groups, these companies
open new markets for products
that meet social and environmental
criteria. Community programs set up at
manufacturing sites give local units a
way to engage in a close dialogue with
the local community to improve the
lives of residents and foster closer ties
with the company.
Better long-term performance
The greatest value of IPM is to create
future business prospects. Monitoring
performance helps companies identify
and mitigate environmental and
social risks, and to spot and seize on
emerging sustainability trends and
market opportunities. By shifting from
the process of IPM itself, to reaping the
benefits that accrue from it, companies
can take advantage of new market
opportunities and drive the transition
to a more sustainable business.
The road ahead: opportunities of
integrated performance management
Accenture and the WBCSD FLP team would like to express sincere gratitude to all
the company representatives who answered our questions and provided support
in developing this document. Special thanks to the following people for their
insightful feedback and comments in the preparation of this document:
Eric Dugelay Deloitte
Thomas Lingard Unilever
Dr Jeanne Ng CLP Group
Laurent Noual Michelin Group
Mandy Rambharos Eskom
Accenture and the WBCSD FLP team would also like to thank the 2014 FLP
participants who provided cases studies:
Sofia Altmann Sonae
Kris Dumont KBC Group
Yvette Lange PwC
Emily Minton Mitsubishi Corporation
Teddy Roche Solvay
Elizabeth Uhlhorn The Dow Chemical Company
The research, writing and publication of this document was jointly managed by
Accenture (Joost Brinkman, Sytze Dijkstra) and the WBCSD
(Suzanne Feinmann, Kitrhona Cerri).
Acknowledgements
David Falcon
Deloitte
Sylvie Gillet
Michelin Group
Robert Kwok
CLP Group
Lizzy Peacock
Unilever
FLP 2014 Integrated Performance
Management team members

Copyright © 2014 Accenture
All rights reserved.
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High Performance Delivered are
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and survey research from Accenture’s
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Europe and Asia/Pacific.
About the WBCSD
The World Business Council for
Sustainable Development (WBCSD),
a CEO-led organization of some 200
forward-thinking global companies,
is committed to galvanizing the
global business community to create
a sustainable future for business,
society and the environment. Together
with its members, the council applies
its respected thought leadership
and effective advocacy to generate
constructive solutions and take
shared action. Leveraging its strong
relationships with stakeholders as
the leading advocate for business,
the council helps drive debate and
policy change in favor of sustainable
development solutions.
The WBCSD provides a forum for its
member companies - who represent
all business sectors, all continents
and a combined revenue of more than
$8.5 trillion, 19 million employees - to
share best practices on sustainable
development issues and to develop
innovative tools that change the
status quo. The council also benefits
from a network of 70 national and
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organizations, a majority of which are
based in developing countries.
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About the Future
Leaders Program
The WBCSD Future Leaders Program
(FLP) is a unique professional and
leadership development opportunity
aiming to provide future business
leaders with an in-depth understanding
of sustainability challenges that will
feed into their strategic decision-
making. It is designed to help future
leaders in their dealings with the
often complex interdisciplinary
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